The Sensex has once again been unable to cross 17,200 and we should wait for a firm move on either side for clarity as to where the index is headed in the short term. Watch out for a breakout either below 17,000 or above 17,200.

On Monday, the Sensex closed at 17,164.99, 1.63 points from the previous close of 17,166.62.

On Friday, the Dow Jones Industrial Average was up 13 points while the Nasdaq and S&P 500 remained flat. During the day, except for the Jakarta Composite, Nikkei and NZX50, all Asian markets ended in the red. Markets in China and Taiwan were also sharply down. Among European markets, the CAC 40, DAX and FTSE opened down in the range of 0.03%-0.18%.

Among index heavyweights, Tata Consultancy Services (TCS) was up 2.27%. Malaysia Airlines and TCS have sealed a five-year contract for end-to-end IT infrastructure services. TCS also paid an advance tax of Rs178 crore, compared to Rs53 crore in the year-ago period. Infosys gained 1.07%. Its advance tax outgo has doubled to Rs250 crore from the Rs125 crore it paid in the year-ago period.

Godrej Consumer Products Ltd was up 1.13%, after the company announced the acquisition of Tura from Africa's Tura Group. Tura is a market leader in personal care, manufacturing and distributing of soaps, moisturising lotions and skin-toning creams.

During the day, Transport Corporation of India shot up almost 20% on the news that it plans to de-merge its real estate and warehousing division. Among the smaller stocks, 20 Microns rose 13.5% on the news that it plans to double plant capacity and spend Rs50 crore on capital expenditure.

Magma Fincorp Ltd was up 5.32% after the Board approved the issue of 20,00,000 warrants convertible into equity shares to the promoters and/or promoter group on a preferential basis. The ratio of conversion of warrants to fully-paid equity shares will be 1:1. The warrants are convertible into shares within a period of 18 months in one or more tranches at a price not less than Rs250 per share of Rs10 each.

Banking stocks fell on fears that the central bank may raise rates to tame inflation. India's largest bank by net profit and branch network State Bank of India (SBI) fell 1.45%. Its Q4 advance-tax payment rose to Rs1,857 crore from Rs1,810 crore a year earlier. SBI chairman OP Bhatt recently said that the bank was looking at tapping the retail bond market next year with a 10-year issue, although the initial issue size may be as small as Rs50 crore-Rs100 crore.

The shares of Hindustan Construction Co Ltd fell 2% after the company approved the acquisition of a controlling stake in Karl Steiner AG, the
second-largest operator in the Swiss real-estate market. The company will acquire 68% stake via issuance of new shares in consideration for a CHF 35 million cash investment in Karl Steiner. Karl Steiner will use these funds for its Swiss operations, and the growth of the company’s core business in India’s booming residential and commercial construction market.

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The government wants to use e-governance as a tool for better administration. It needs to wake up to the fact that e-governance requires not only technology infrastructure, but also the human will to make it work

Recently, I visited a government office and was shocked to see the working conditions there. Forget facilities, there was not even a proper seating arrangement for the staff. Huge bundles of files were piled up on the shelves, threatening to crash anytime into the heads of passersby; tables and chairs were crammed like vehicles in a traffic jam and the computers looked like they belonged to some pre-Internet generation.

This last observation was the most depressing. While both the Central and State governments pay lip service to issues like e-governance, corporate governance and financial inclusion, the ground reality is starkly different. This particular office I visited deals with financial matters. The officer I met is supposed to handle around 5,000 cases every year. He is handling almost seven times more than that. Forget about skilled employees, there is no workforce even for routine jobs in the office.

Therefore, the officer has hired some outside people and is paying them from his pocket. After a scam was unearthed in this office, in which some employees and agents were arrested, all the remaining officials are playing it safe and are closely scrutinising each and every file, resulting in inordinate delays. The official is supposed to dispose of all the remaining cases (around 7,000) by March–end, but he is struggling to clear more than 150-200 files a day.

There are very few employees who know how to operate the department's software. Three big offices of the department, including the one I visited, have only one IT service engineer, who is clueless when the system fails. According to the employees, the engineer often spends the whole day resolving a minor problem, resulting in wasted overheads and loss of productivity.

This is not an isolated example of the rot of e-governance. Most government websites are dysfunctional and getting the information you want from them can be a daunting task. Take, for example, the website of the Maharashtra government (http://www.maharashtra.gov.in). Under the 'Departments' tab, you would expect to find a list of all the government departments. Nevertheless, it provides two links, namely, 'Mantralaya' and 'All Departments'. Stranger still, the 'Mantralaya' link provides a list of websites of some of the departments while the 'All Departments' link provides information about the State-run bodies under various departments. The 'Industries/Energy' tab provides links to MSEB Holding Co Ltd (MSEB), Directorate of Industries, Maharashtra Energy Development Agency (MEDA), etc. But to access information related to the Industries or Energy department or ministry, you will need to click the 'Mantralaya' link. What a mess!

The official website for booking rail tickets (IRCTC.co.in) remains unavailable for users who want to book tickets under the Tatkal quota, till 8.15am every day. They can access the site only after all the Tatkal tickets are booked by travel agents. "Naturally, this does not seem to be a system failure conveniently happening between 8.00am-8.15am. This cannot happen without the authorities being involved," says a user who posted his comments on the Moneylife website.

The IRCTC website is designed to disappoint users in many more ways. I recently booked two tickets for my parents, both senior citizens, through the site. I specified lower berths for both travellers, but to my surprise, they were issued upper berths (in fact, my mother was assigned an upper berth among the side berths). When I went to see them off, there was more surprise in store. All the berths, except those assigned to my parents, in that particular compartment were given to people whose names were on the waiting list. To avoid such situations, I now book my tickets physically at a railway counter instead of using the IRCTC website—which also charges me more for online booking.

The authorities need to wake up to the fact that e-governance requires not only the technology infrastructure, but also the human will to make it work. But that’s one lesson which our babus have shown scant inclination to learn.

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COMMENTS

Vivek

7 years ago

It all bottoms down to the leadership of the department/organsiation. There is a vacuum at the top. Otherwise, with the budegetary resources and some really committed people, it is not an impossible task for reinventing the way our Govt departments work. That is why the entire process of IAS / Other staff recruitment of Govt. including quota policies need to be totally changed in sync with requirements.

Shadi Katyal

7 years ago

Why is this any surprise or shock to anyone. Govt has 60% more employees than a working office will need but Govt being the biggest employer thus creates vote banks. Is anyone in Center or even in States worried about work. what Work.
Look at Air India has 31000 employees and compared to Jet with same number of planes has 13000. Jet pays better salaries and yet we continue to recruit more for Air India,
take Banks and see how much work is done. No where in the world we have seen the wastage of time of clients also. When one deposits or wish to cash a cheque, one stands in one line and than a token is give to collect the funds on another window. why the person collecting your cheque cant give you the funds.It is just to create more jobs.
Govt of India burden of such salaries is so high that most of the funds which could provide even potable water are utilised to pay the salaries of non productive employees.World has moved away from paper to computers but Indian offices still survive on it.
There is joke going around that when someone needed help from some Babu and asked so Babu demanded money and when told is he not paid, Babu replied but that is to come here not to work.
Than we have Ministries which should not even exist but with coalition in the center every party wants a ministry and thus more Babus
More the Babus more the red Tape and more the delay in any project.
That is India. Chalta Hai Bhai

shibaji dash

7 years ago

You need a Chidambaram in every Minister-Centre or State- to select and nurture teams of dedicated officers to serve as radial centres in different parts of the country continuous for technological upgradation . Incometax Dept commenced computerisartion in eighties. But the quality and quantum leap was in the years 2001 to 2007. And the momentum continues. Incidentally, in the States, what about land bank formation. Phew !

Bond Street seems to have taken the FM’s fiscal consolidation plans with a pinch of salt as bond yields have since surged past 8%, perhaps due to the government’s borrowing programme

In his Budget speech, finance minister Pranab Mukherjee had outlined a clear path for the government to pull back from its heavy borrowing position. He had proposed to bring down the fiscal deficit to 5.5% of gross domestic product (GDP) by the end of the next fiscal year from the current 6.8%. This came as a relief to many economists as continued borrowings would have threatened to put inflation out of control. The bond markets, though, have apparently not yet taken the minister’s word on this matter.

Since the finance minister’s Budget day speech, bond yields have risen rapidly to cross the 8% mark, for the first time since October 2008. Yield on the 10-year government bond jumped to 8.01% in a matter of weeks. Bond prices have plunged, as investors are shying away from putting in more money in government paper. What is causing the bond market to be so cautious?

Apparently, investors on Bond Street are still fearful that interest rates are likely to pushed up on account of the high borrowing by the Central government. Despite all the talks about fiscal consolidation, investors are sceptical whether the government can actually deliver on its promises.

Axis Bank’ treasury head RVS Sridhar believes that yields are moving up because of the tighter liquidity conditions expected on the back of high government borrowings. “The Union Budget has projected high net borrowing of about Rs3.45 lakh crore in FY11. Given tighter liquidity conditions that are expected, such a high borrowing is expected to be detrimental to low yields. Bond markets have reason to be cautious about the high borrowings as liquidity conditions are unlikely to be favourable. The Reserve Bank of India (RBI) would need to step in with a suitable strategy to address the caution,” he said.

Inflation is an unavoidable corollary of the government’s borrowing binge. Wholesale price-based inflation rose to 9.89% in February from 8.56% in the previous month due to increase in prices of certain food items such as sugar and the hike in excise duty on fuel announced last month.

Mr Sridhar said, “Inflation remains the major concern, given that high inflation, seen currently, could invite tough action from the RBI in the form of tightening, and push up yields. However, the market view suggests that inflation may ease to about 6% by about June or July 2010 and may provide comfort at that stage.”
In the face of this surge in bond yields, banks are now staring at huge losses on their income statement. It is customary for banks to provide for marked-to-market losses, as per RBI’s guidelines. This is where bank treasuries will feel the pinch. {break}

Mr Sridhar believes that banks that may have excess statutory liquidity ratio (SLR) holdings are likely to face pressure due to rise in yields. “However, banks that have been hedging or those which have a nimble strategy could reduce the impact significantly. Also, banks would stand to gain on account of higher yields on their investments. Surely, that would be insufficient to take care of investment losses”, he added.

The markets are now bracing for some action by the RBI in its April monetary policy. Faced with mounting worries about inflation, it is expected to take a hard stand on the matter. It had hiked the cash reserve ratio (CRR) by 75 basis points to 5.75% in its December monetary policy review.

This time, the RBI is likely to raise the repo and reverse repo rates a couple of notches to reign in the excess liquidity in the system. Mr Sridhar is of the opinion that the RBI could hike CRR by about 25-50 basis points in its April policy, while hiking the reverse repo and the repo rates by 25 basis points each.

Rohini Malkani, economist, Citi India said, "Given the growing influence of structural factors, the WPI could likely remain in high single digits rather than the preferred range of approximately 5%. This in turn could potentially keep the rate structure higher. We expect the RBI to raise policy rates by a minimum of 125bps in 2010 with a first hike in its policy on 20th April.”

Echoing the same views, Tushar Poddar, vice president and chief economist, Goldman Sachs (India) said, "(Due to) elevated food and fuel inflation, and signs of them spilling over into core (sectors), long transmission lags in policy, risks of rising inflationary expectations, and excess liquidity feeding through to asset and general prices, we continue to expect the RBI to begin withdrawing liquidity through the CRR of banks and to hike rates by 50 bps by the 20th April policy meeting. The probability of a rate hike before the policy meeting has increased. Cumulatively, we continue to expect the RBI to hike effective policy rates by an above-consensus 300 bps in 2010, 150 bps by raising repo and reverse rates, and 150 bps by tightening liquidity."

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shibaji dash

7 years ago

Any one can say why Finance Bill 2010 proposes to reintroduce the permanent amnesty to tax evaders caught in search and seizure cases by undoing the corrective amendment that was inserted by the Finance Act 2007 in Section 245C/H etc of Chapter XIX A of the Incometax Act, even if the amnesty provisions split in the past and now will again split the Incometax Organisation right in the middle in to two incompatible segments?